Screen printing on customer-supplied tiles was not a taxable sale; consumables did not create works contract turnover.

Screen printing designs on customer-supplied glazed tiles was treated as processing work, not a sale of goods, because the ink, stains, colours, glaze, vitrosa and packing materials were used only as consumables in execution of the work. On that basis, sale turnover provisions were not attracted. The article also notes that any transfer of property, if assumed, would in substance relate to inter-State supplies to customers outside Karnataka and would not support levy under the Karnataka Sales Tax Act in the manner attempted. Section 17(7) was held inapplicable because the assessee was not purchasing goods for use in a works contract, and the deletion of the tax demand was upheld.

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Issues: Whether the receipts from screen printing of designs on plain glazed tiles supplied by customers outside the State were liable to tax under the Karnataka Sales Tax Act as works contract turnover, and whether the materials used in the process amounted to a transfer of property attracting tax.

Analysis: The activity was found to be screen printing of designs on tiles supplied by customers, with ink, stains, colours, glaze, vitrosa and packing materials used only as consumables in the execution of the work. On that footing, the process did not amount to a sale of goods, and therefore the provision governing sale turnover was not attracted. The Court also held that, even if the transaction were viewed as involving a transfer of property, the supplies to customers outside the State would in substance be inter-State in character and would not justify levy under the Karnataka Sales Tax Act in the manner attempted. Section 17(7) was held inapplicable because the assessee was not purchasing goods from outside the State for use in execution of works contract, but was processing customer-supplied goods and returning them after printing.

Conclusion: The levy of tax on the entire turnover under section 17(6) was not justified, and the Tribunal's view deleting the demand was upheld.

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